"Since 1960, when payroll growth has dipped persistently
below its recovery-period average, the US economy has more often
than not found itself in an NBER-defined recession 9 to 18 months
in the future," said Barclays.

"Hence,that payroll growth has fallen below
the current expansion average in three of the past four months
signals to us that risks of a near- to medium-term recession have
risen."

JP Morgan's proprietary model that gauges the risk of a recession
starting over the next 12 months also hit its highest mark since
the financial crisis on Friday. Most of this was on the back of
lackluster economic data.

"With the rally in risk markets over the last month, our models
based on financial market pricing now see a recession risk
moderately below our model based on macroeconomic data," wrote JP
Morgan economist Jesse Edgerton.

"Since last week, we have seen disappointments in the Dallas Fed
measures of manufacturing and nonmanufacturing sentiment, the ISM
nonmanufacturing index, and the Conference Board measure of
consumer confidence."

JPMorgan

Edgerton also followed that up by highlighting,
as we have before, the decline in profit margins. Typically,
when profits margins begin to decline that is an indication
that a recession is not too far away.

Some have speculated that the margin compression will not lead to
a recession because it is similar to the oil-led margin drop in
the late 1980s. In that case, as oil prices improved (like they
are now) margins recovered and the US avoided the recession.

Edgerton noted, however, that there is one difference that makes
this more like a typical profit decline, thus heralding the start
of recession. Here's Edgerton:

But we see less impetus for a 1980s-style rebound in other
industries. In particular, the dollar was likely a key
contributor to the rebound (Figure 3). It is true that the real
dollar rose sharply through early 1985, contributing to the
initial margin squeeze. But then the real dollar fell 28% by
1988, driving double-digit growth in real exports that
contributed more than 1%-pt to GDP growth and presumably boosted
profits, margins, capex, and hiring. At the moment, with the
global economy struggling to grow above trend and the Fed
debating more hikes in response to a tightening US labor market,
we see little reason to expect another historic dollar
depreciation.

Let's be clear, a few data points do not equal a recession. The
average rate of hiring is still fairly healthy and some downturn
in the headline number was expected. Consumer spending is still
high and forecasts
for GDP growth remain strong.

That doesn't mean that Friday's numbers aren't worrying — they
are — but perhaps the "recession" whispers will stay just
whispers for now.